Pessimism rose sharply in accounting firm PricewaterhouseCooper’s latest Annual Global CEO Survey, with a four-fold increase predicting a decline in global growth for 2019. The 2019 findings paint a stark contrast to 2018’s record-breaking level of CEO confidence, and reflect growing concerns over trade protectionism and labor immobility between markets, the firm’s report stated.
“All over the world, we have seen populist politicians exercise increasing influence over economic policy,” the report stated. “The result has been one recognised by the World Economic Forum: a trend toward nation-state unilateralism and, consequently, greater global fragmentation and uncertainty.”
The picture is not all bleak. A majority of CEOs still believe global economic conditions will improve in 2019, but the number of respondents checking “decline” brought the two trend lines much closer together. Last year, only 5 percent of chief executives said they saw a coming decline in the global economy, compared to 29 percent in the 2019 survey.
“Global growth will be somewhat slower, but I don’t see a massive recession coming any time in the next 18 months,” said Piyush Gupta, chief executive officer of DBS Singapore, southeast Asia’s largest bank by assets, who was quoted in the PwC report. “What could throw that off, obviously, is ‘event risk’, particularly around China, not so much trade as leverage and idiosyncratic counterparty events given the amount of bonds issued out of China. I do think the psychology around trade is a risk. There’s a general environment of skittishness, and there could be feedback loops from that into the general economy.”
PwC’s annual survey has run since 1997 and the firm maintains that CEO outlook does have some predictive value, as past survey responses have generally aligned to market trends.
The survey also found a shift in CEO concerns, with hot geopolitical issues such as terrorism and climate change dropping in importance and being replaced by skills shortages, policy uncertainty, and trade disputes. It should be noted, however, that 2019 was the first year CEOs were asked to rank policy uncertainty and trade disputes in their list of global risks.
“Amid the wave of populist and protectionist sentiment sweeping across continents, CEOs have turned their focus inward, as they adapt to newly erected barriers between markets — both trade and labor,” the report stated. “They are less bothered by the broad, existential threats that rose in the rankings last year — for example, terrorism and climate change — and are more ‘extremely concerned’ about the ease of doing business in the markets where they operate. The revenue and expansion opportunities CEOs identify are also more internally oriented and closer to home.”
